IRA Recharacterization
Hi,
I created and contributed to a traditional IRA in 2022. I then recharacterized it into a Roth IRA in February 2023, but it was applied to 2022 for tax purposes. I listed the recharacterization on my 2022 tax return on form 1040 Line 4a - IRA Recharacterizations. My MAGI was below the standard deduction, but I'm not sure if the recharacterization was included in that — it doesn't seem like it was. Will I have to pay taxes on the recharacterization in 2023 even though it was supposed to be applied to last year's taxes?
Thanks.
Best Answers
-
I'm very sorry that your original question wasn't addressed. Typically the contribution to the traditional IRA would have been reported on your 2022 return since that's when you made that contribution. Then, you should receive a 2023 1099-R reporting the recharacterization. Once you receive that, you will amend your 2022 return to report that 1099-R (even though it is a 2023 1099-R). It is not a taxable event, but does need to be reported.
More information can be found in IRS Publication 590-A.
-
Thank you. This was very helpful, much appreciated!
Answers
-
Bumping this just because it didn't get answered and I'm really hoping it does!
-
Hi Irarechar,
First, it may be important to get terms straightened out. Generally, you convert from an IRA to a Roth and recharacterize from a Roth to an IRA (when the Roth contribution is disallowed due to income limits). It sounds like you did a conversion.
You should be getting a 1099-R. If you have earnings on the IRA before it was converted, you will get taxed on that and it could be reported on your 2023 return.
-
No, I did not do a conversion. I clearly stated multiple times that it was a recharacterization that was supposed to be applied to the 2022 tax year. I'm aware of the differences in the terms.
Your answer pertains to a conversion and it does not address what I asked.
